UBS increased its palladium price targets, raising projections for December 2026 and March 2027 by $200 per ounce each, while boosting its June 2027 forecast by $100 per ounce. The bank attributed the upgrades to tighter physical market conditions and more resilient demand than the bank had previously anticipated.
Palladium consumption patterns have evolved differently than UBS initially projected. Global demand fell only modestly in 2025 and is expected to remain broadly stable in 2026. The transition toward electric vehicles has progressed at a slower pace than previously forecast, which has supported continued demand for palladium in automotive catalytic converters. Hybrid vehicle adoption across major markets including the United States, Brazil, and parts of Asia has further bolstered consumption by extending the operational life of internal combustion engines and catalytic converter applications.
Supply-side factors have also tightened market conditions. Global palladium mine production declined in 2025 and is forecast to fall again in 2026. Russian output has faced headwinds from declining ore grades, while South African producers have maintained capital discipline rather than pursuing production expansions. Recycling activity is improving, though UBS expects recovered metal to offset only a portion of the decline in primary production.
Despite the upgraded near-term forecasts, UBS maintained a cautious stance on palladium’s long-term demand trajectory. The bank continues to expect weakness as electric vehicle adoption accelerates and internal combustion engine vehicle production declines. However, the combination of relatively stable near-term demand and reduced supply is expected to limit downside price risk during 2026, supporting the bank’s revised forecast framework.
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